The applicable clause from the RRG Subscription Agreement is this:
(d) Reduction in Redemption Price. The Redemption Price payable to a
Subscriber for Shares shall be reduced by the Reduction Amount (as defined below) in
the event (i) the Subscriber is the subject of a Triggering Event described in Sections
4.3(b), 4.3(c), 4.3(d) or 4.3(e) above; or (ii) the written notice from the Subscriber to the
Company pursuant to Section 4.3(a) above was provided within the Minimum
Commitment following the Effective Date. If the Redemption Price is less than $5000,
the Reduction Amount shall be 100%. If the Redemption Price is at least $5,000, the
Reduction Amount shall be 50%.
The time commitment is defined here:
3.4 Commitment to Company. Each Subscriber may be required to commit to
remain an Active Subscriber for a fixed period of time to provide the Company with stability that
will foster its success. Initial Subscribers will be required to make a commitment of not less than
five (5) full consecutive Policy years. In the event that a Subscriber breaches the Minimum
Commitment to remain an Active Subscriber for the full period of the commitment, the
breaching Subscriber shall be subject to the reduction in Redemption Price set forth in Section
4.5(d) of this Agreement. A Subscriber will not be deemed to have breached the Minimum
Commitment to remain an Active Subscriber if the Company cancels or fails to renew the
Subscriber’s Policy for underwriting reasons pursuant to Section 4.3(f) of this Agreement.
Obtaining insurance as a Small Business Flight School, through membership in PASA, does not require
a minimum term and an investment in RRG ownership. Large Business Flight Schools, by contrast
are directly insured by the RRG, and must be part-owners of the RRG under federal law. The
minimum ownership level is $500, and many LBFS have invested significantly more than that.
The maximum that a LBFS may invest is $100,000. We encourage small schools to choose the
PASA-membership option, unless they are large enough and committed for the long term to
being insured by the RRG.
The agreement was provided to Mike, and signed by him before coverage was bound. I do
not have a copy of his signed agreement available to me at the moment, but the RRG can
not issue a policy without having that signed document in hand first.